Turkey | GDP growth decelerating after strong performance in 2021

Summary

Turkish economy grew by 9.1% y/y in 4Q21, which resulted in a full year growth rate of 11% in 2021. Based on high frequency indicators and our big data information, GDP growth is already decelerating to almost 0% q/q growth rate in 1Q22, which corresponds to near 6% y/y. We maintain our GDP growth forecast at 3.5% for now.

Key points

• Key points:
• In 4Q21, domestic demand remained solid on top of mainly private consumption (21.4% y/y), whereas government consumption contracted (-0.8% y/y). Investment once again subtracted from growth (-0.8% y/y).
• Exports remained strong (20.7% yoy), while imports grew moderately by 2.6%. Thus, the contribution from net exports slowed down to 4.2pp (vs 6.9pp in 3Q21).
• On the production side, the main contributor remained to be the services sector, followed by the industry; whereas the construction sector continued to contract.
• Russia’s invasion of Ukraine and sanctions from the US, EU and other countries are clear additional downside risks on the growth outlook, which might deepen further depending on the duration of the conflict.

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